Former Attorney Pleads Guilty in Manhattan Federal Court to Filing Fraudulent $1 Million Personal Injury Claim Against the FBI

Preet Bharara, the United States Attorney for the Southern District of New York; Janice K. Fedarcyk, the Assistant Director in Charge of the New York Office of the Federal Bureau of Investigation (FBI); Raymond W. Kelly, the Police Commissioner of the City of New York (NYPD); and Thomas W. Lohmann, the Director of Field Operations for the New York Region of the National Insurance Crime Bureau (NICB), announced that former attorney Jeffrey Squitieri pled guilty today in Manhattan federal court to one count of conspiring to commit health care fraud. Squitieri pled guilty before United States Magistrate Judge James L. Cott.

Manhattan U.S. Attorney Preet Bharara said, “Jeffrey Squitieri had a novel and corrupt concept of what it meant to zealously represent his legal clients. He used them to perpetrate a fraud on the health care industry by encouraging, and even badgering, them into scheduling multiple, unnecessary doctor visits and medical procedures at a clinic with which he was colluding. His arrest was the result of the cooperative efforts of federal and local law enforcement, all of whom remain committed to rooting out healthcare fraud and punishing those responsible.”

FBI Assistant Director in Charge Janice K. Fedarcyk said, “The defendant engaged in a flagrant scheme to commit fraud, giving detailed instructions to another to abet him in this scheme. His conduct was not only in clear contravention of his ethical duties as a lawyer; it was criminal.”

NYPD Commissioner Raymond W. Kelly said, “Patients were given treatments they didn’t need for injuries they didn’t have to make millions for a fraudster who didn’t care.”

NICB Director Thomas W. Lohmann said, “When the NICB located its first medical fraud task force in New York in 2002, it was because our agents, working with our federal, state, and local law enforcement colleagues, identified these kinds of schemes and their potential to cause significant economic harm. Over the years, our working relationships have solidified and that mutual cooperation is the core of successful investigations at all levels.”

According to the complaint and information filed in Manhattan federal court:

In January 2011, a joint health care fraud task force (the HCFTF) comprised of the FBI, the NYPD, and the NICB, sent an undercover officer (the “undercover”) into a health care clinic in the Bronx, New York (the “clinic”) posing as a car accident victim seeking unnecessary medical treatment. To ensure that the undercover would be treated at the clinic, the HCFTF created a “police report” purporting to show that he had been in a car accident. The HCFTF used the license plate number and vehicle information of a rental car from an agency (the “rental agency”) located in New York, New York, to create the police report.

On January 25, 2011, the undercover was introduced to Squitieri at the clinic by an employee. During the meeting, the undercover was wearing a covert recording device. Squitieri told the undercover that he would handle his personal injury case and said that it was his job to make the undercover money. He also told the undercover that he had 90 days to make as many visits to the clinic as possible and that the more visits he made, the more money they would both make. Squitieri suggested that the undercover go to the clinic three to four times a week and told him to get MRIs. He also told him that he got one-third of whatever reimbursements the undercover received but only if the undercover actually went to the clinic for treatments.

In March 2011, the undercover made a series of recorded calls to Squitieri. During those calls, Squitieri repeatedly told him to go to the clinic more often and to get MRIs on his back and neck. Squitieri said, among other things, “You have to do your end of the [expletive] job here”; “Help me help you”; and “Just get the MRIs done.”

During another recorded call on March 7, 2011, Squitieri told the undercover: “I’m trying to get you in to see a doctor by next week...he is a chiropractor that does what is known as manipulation under anesthesia, and, you know, I’ll explain to you more, but this will, uh, enhance the value of your case.” Manipulation under anesthesia is a form of treatment where the patient is rendered unconscious and then the treating doctor proceeds to stretch and contort the body. When a patient undergoes manipulation under anesthesia, it can drastically increase the size of the insurance claim and/or lawsuit.

In May 2011, Squitieri contacted the rental agency requesting information about the vehicle listed in the police report. An employee with the rental agency informed Squitieri that the car had been rented to the FBI, which is self-insured.

On June 7, 2011, Squitieri mailed a claim for one million dollars in damages to the FBI on behalf of the undercover. In June and July 2011, Squitieri called the FBI Legal Unit inquiring as to the status of his claim.

Squitieri was disbarred in September 2011 in connection with an unrelated matter.

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Squitieri, 45, of Englewood Cliffs, New Jersey, faces a maximum of 10 years in prison and three years of supervised release. He is scheduled to be sentenced by United States District Court Judge William H. Pauley, III on August 24, 2012.

Mr. Bharara praised the investigative work of the HCFTF. He also thanked Allstate Insurance for its invaluable assistance in the case.

The prosecution is being handled by the Office’s Organized Crime Unit. Assistant United States Attorney Harris Fischman is in charge of the prosecution.